Transcript Ch13

Internet Marketing
Internet Marketing Plans
A Dynamic Virtual Chapter
http://www.swcollege.com/marketing/hanson/hanson.html
Topics
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Online demographics
Online commerce statistics
Online marketing costs
Internet marketing plan checklist
Online Demographics
Most of the world is still not online!
• Key usage drivers are income, education, computer
ownership, residence, and age.
– Internet usage rises sharply with household
income
– The more educated someone is, the more likely
they are to be online
– Internet usage varies dramatically by the region
of the country and region of the world
– Middle-age heads of households are most likely
to be online, followed by younger households
and trailed by seniors
Online Demographics
Income
• Income is a strong positive driver of Net
access in all regions of the country
– High income groups have influenced the success
of infant industries such as online trading
• There is a concern of a "digital divide"
between rich and poor
– Lower income individuals have a much lower rate
of online use
– They are unable to reap the benefits of the
Internet
Online Demographics
Education
50%
Quotable Quote:
40%
Early adopters of the
Net are the most
educated members of
society. As the Net
diffuses to a wider
audience, ease of use
and simplicity become
even more important.
The Net needs to be
more "appliance-like".
30%
20%
10%
0%
Elementary Some H.S. H.S. Diploma
U.S.
Rural
Some
or GED
College
Urban
Central City
B.A. or more
Internet Usage Based on Education and Region
Online Demographics
Region
• Internet use varies greatly by region of the
country
• Alaska has the highest usage; the South
has the lowest
• Long, dark winters may lead to more usage
– Finland is the most wired country in the
world
Online Demographics
Gender
50%
The gender gap
that
characterized
the early years
of the Net is
rapidly closing
40%
30%
20%
10%
0%
Male
At Home
Female
Outside Home
Any Location
Internet usage based on gender and place of connection
Online Demographics
Usage Continues to Grow
Percentage of
Americans who…
1995
1998
Own a computer
36
43
Use the Internet
14
41
Go online every day
3
12
Use e-mail
10
35
1
13
Bought online
Online Demographics
International Access Lags Behind the US
Percent of
population
with
Internet
access at
home or at
work (1998)
Online Commerce Statistics
Top 20 E-Tailers of June 1999
Rank
Site
Projected No.
Unique
of Purchasers
Users
Purchase
(000)
Reach (%)
(000)
Rate (%)
1
amazon.com
562
14.70
6,463
8.70
2
ticketmaster.com
280
2.90
1,258
22.30
buy.com
273
3.30
1,441
18.90
4
sony.com
226
5.60
2,473
9.20
5
mothernature.com
196
2.60
1,162
16.90
6
iprint.com
174
1.90
826
21.10
7
drugstore.com
154
1.90
814
18.90
8
hallmark.com
153
1.10
486
21.40
9
netmarket.com
138
1.50
672
20.50
10
cdnow.com
116
7.50
3,288
3.50
11
computers4sure.com
104
1.20
526
19.80
12
barnesandnoble.com
101
5.30
2,307
4.40
13
apple.com
99
4.50
1,983
5.00
14
etoys.com
83
3.40
1,485
5.60
15
enews.com
70
2.50
1,109
6.30
compaq.com
64
1.90
824
7.80
17
smarterkids.com
58
2.00
857
6.80
18
gateway.com
56
2.80
1,227
4.60
19
spree.com
56
3.10
1,364
4.10
20
egghead.com
41
2.90
1,269
3.30
3
16
Source: PC
Data Online
Online Commerce Statistics
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Affiliate programs,
such as Amazon
Associates, combine
the business model
and network
phenomena.
They have a direct
tie to e-commerce
because you don't
get a fee unless a
sale is made.
Top 10 Affiliate Programs, April 1999
1.
AutoFusion’s Car Prices.com
2.
Strange News Ticker
3.
Music Boulevard
4.
Amazon.com
5.
One & Only Internet Personals
6.
Lending Tree
7.
Reel.com
8.
All-Hotels.com
9.
Info-Links Network
10. iSyndicate
Source: refer-it
Online Commerce Statistics
Consumers told Greenfield Online the best features
of online shopping are the abilities to quickly and
easily compare prices and shop at any time.
Outlet Customers are Most Likely to Use When Ready to Buy
Online
Catalog
Local Store
Mall
Software
49%
22%
63%
41%
Books
49%
23%
68%
52%
Clothing
18%
22%
66%
68%
Product
Online Commerce Statistics
• By the end of 2002, $2.8 billion will have
been spent worldwide on e-commerce
software.
• 78 percent of this total will derive from from
investment in distribution channel management,
online procurement, and supply chain
management (business-to-business e-commerce
solutions).
• Business-to-consumer e-commerce, which in
1997 made up 41 percent of e-commerce
software revenues, will in 2002 account for
just 22 percent.
Online Commerce Statistics
• Business-to-business e-commerce focuses not so
much on revenue generating as increasing efficiency
of business processes. Now, smaller and mediumsized enterprises can benefit through increased
efficiency and disintermediation of the supply chain.
• The true value of business-to-business e-commerce
comes when other businesses adopt such solutions.
When suppliers and buyers using e-commerce form
relationships, both can reduce their costs.
• Relationships with business partners will be vital.
Companies will only invest if there are enough other
enterprises investing, otherwise the technology will
be of no use.
Online Commerce Statistics
E-Commerce Software Market
1997
2002
Global
$168 million
$2800 million
Europe
23%
34%
Applications
Supply
12%
30%
Distribution
36%
30%
Procurement
11%
18%
Business to Consumer
41%
22%
Source: Data Monitor
Online Commerce Statistics
More Travelers Booking Online
• Nearly one-third of Internet users who visit
travel-related Web sites have made online
reservations at those sites, according to a
study by NPD Online Research.
BUT. . .
• A majority of Internet travelers still divert
the confirmation of their travel reservations
to traditional travel agents.
Online Commerce Statistics
Why Internet Users Book Travel Offline
Total
Respondents
Newbies
Intermediates
Net Vets
Lowest Price
31%
28%
28%
33%
Credit Card Security
18%
33%
25%
13%
Human Contact
16%
8%
16%
16%
Accurate Reservations
14%
9%
13%
14%
Other
21%
22%
18%
24%
Source: NPD Online Research
Online Marketing Cots
Web Site Costs
Web Site Costs
Hosting
Improving
Managing
Online Marketing Costs
• As software tools become powerful and
more available, simple web tasks are easy
and cheap to perform
BUT. . .
• Increasing customer expectations lead to
increasing costs
AND. . .
• The cost of web design talent is also
increasing
Online Marketing Costs
A Host For Your Site
•
A web host has its own collection of servers,
services, support staff and infrastructure for
your company to use on a subscription basis.
•
For a set up fee of $50-$100 and monthly
charge of $20+, you receive your own domain
name (www.mycompany.com) and your own IP
address (123.456.78.90).
Online Marketing Costs
A Host For Your Site
Hosting services include:
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File storage
Data transfer
Tech support
POP mailboxes
Access to CGI and Java scripts
Microsoft FrontPage extensions
E-commerce tools such as shopping cart
software and secure credit card transfers
– Support for multimedia add-ons
Online Marketing Costs
A Host For Your Site
Benefits of Web Hosting
– Reliability for mission-critical Web
activities
– Faster, better Web access
– Reduced costs
– Added functionality
– Extensive tech support and assistance
– Domain-name identity
Online Marketing Costs
Development Costs Are On the Rise
Simple Site
Med Site
Large Site
Feb-99
$78,000
$150,000
$440,000
Jun-98
$44,500
$99,750
$302,975
Oct-97
$25,000
$83,000
$275,000
Apr-97
$18,750
$67,500
$330,000
Sep-96
$26,100
$102,025
$596,073
75%
50%
45%
$167,500
$311,570
$1,066,870
$750
$4,500
$1,000
Change from
Jun-98
National High
National Low
Source: NetMarketing
Online Marketing Costs
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The development of a serious e-commerce site costs an
average of $1 million according to The Gartner Group.
•
Labor is the most important cost driver, and time to
market can be considerable.
Distribution of Costs
Cost to Develop an E-Commerce Site from Scratch
Cost to Develop
Average
$1 million
Low End
Less than $350,000
High End
More than $2,000,000
Hardware
11%
Software
Time to Complete
Average
5 months
Laobr
High End
1 year
79%
Number of External Firms Used
Respondents "On Budget"
2 or more on average
None
10%
Internet Marketing Plan Overview
• An Internet marketing plan
– Is a specific implementation of the opportunities,
tradeoffs, and strategies presented in the text
– Outlines a set of goals
• Two options:
– Embedded plans include web-related decisions and
impacts and are a part of a general marketing plan
• Best for long-term analysis or when online activities are
part of an integrated marketing approach
– Stand-alone plans analyze and discuss Net
activities separately from the full range of
marketing department activities
• Best for analyzing specific campaigns, Web enhancements
or “Dot coms”
Traffic Building
• Traffic is an asset
• Traffic is getting more expensive and
difficult to generate as online competition
increases
• Retaining traffic is very valuable
– Stickiness, duration of visits & repeat visits
are all important
• Traffic building strategies should
reinforce basic branding positions
• Traffic building uses a wide variety of
tools that should be synchronized
Traffic Building
Traffic-Driving Tools
•
Banners are
popular but
effectiveness is
questionable
•
Big winners:
– Affiliate
programs
– E-mail
– PR
•
The winners all
take advantage
of network
effects
(Metcalfe’s Law)
Traffic Building
Advertising Media Selection
• Brand building works best on TV and radio
• The total amount spent promoting sites is
growing and shifting toward off-line
advertising and e-mail
• More mainstream Net use means more
mainstream promotion methods can be used
• E-mail is showing higher conversion rates
than online banners
• Bandwidth still prevents “TV-like” ads online
Traffic Building
Top Sites
• Looking at the most popular online sites
shed light on the range of trafficdriving results
• The top sites are portals, but there
are some unusual top-ranked sites that
aren’t general purpose Web locations
• Take a look at
– Media Metrix’s Top Sites
– Nielsen’s Top Sites
Traffic Building
Nuts and Bolts: Banner Formats
The Internet Advertising Bureau/CASIE
helps standardize the main banner templates
Full Banner
468x60 pixels
Full Banner with
Vertical Navigation Bar
392x72 pixels
Half Banner
234x60 pixels
Traffic Building
Nuts and Bolts: Banner Formats
The Internet Advertising Bureau/CASIE
helps standardize the main banner templates
Button 1
120x90 pixels
Half Banner
234x60 pixels
Button 2
120x60 pixels
Square Button
125x125 pixels
Micro Button
88x31 pixels
Traffic Building
Search Engines
• Search engines provide free traffic without
the need for ads, alliances, and sponsorships
• Yet they’re a source of frustration and
mystery
– How do they work?
– Is it really possible to buy your way up the list?
– What makes them tick?
• Resources that can help:
– Search Engine Watch
– Northern Webs tutorial
Net Marketing Tutorials
Provide Hands On Experience
• Check out the tutorials at
http://www.swcollege.com/marketing/hanson/hanson.html